Borrell: Social Marketing To Soar 68% In 2010

Local businesses spent about $2 billion to market through social networks last year, according to a new Borrell Associates report, and this year will see a "breathtaking" 68 percent boost in social-network spending.

All in all, Borrell predicts that social networks will claim one-third of all online marketing dollars in five years, up from 11 cents of each dollar last year. That will total $38 billion in 2015, up from the total $4 billion spent by national and local outfits last year.

Compared to other digital formats, social marketing will grow much faster over a shorter period of time, said CEO Gordon Borrell, because social media only recently developed the critical mass of niche audiences that made spending dollars financially feasible.

"If you think of social networking as a ride in the great Marketing Carnival, it’s the ride that has all the screaming and thus is attracting long lines away from other attractions," Borrell said. "What you have, very simply, is one other media segment – one that we don’t often think of – being “disintermediated” like the rest of traditional media.  It’s “word of mouth,” which has always been the most effective arrow in any marketers’ quiver.

"The development of social media has digitized and made word-of-mouth marketing vastly more efficient," Borrell said. "In the past, it depended on face-to-face discussions or a telephone call.  Today, a mere click tells all your friends that Vinny’s Pizza in Portsmouth is the best, and that you’re a fan.”

Driving much of the growth is Facebook, with more than 100 million unique visitors in the U.S. and 400 million registered users worldwide. Facebook has achieved a frequency that eludes most online sites - the average visitor came to the site 27 times in a recent monthl, almost once a day.

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Despite this impressive growth, Borrell's Social Network Explosion report calls social marketing "fuzzy" and "misunderstood." The reason? "Social media are fundamentally different from the mass media that most marketers - including online marketers - have been educated to use," the report reads. "The winners in this new and burgeoning arena are going to be those who can forget the past and embrace the new."

The misunderstanding stems from dollars spent on promotion, not just advertising, as well as difficulty measuring results and a medium based on networks of friends, not on a one-to-many mass media model.

The $995 Social Network Explosion report explores these themes in depth and breaks down U.S. social-marketing spending by DMA. It also examines how a Facebook marketing campaign compares to a cable TV campaign targeting a certain demographic and interest profile.